Analysis of the New Specialized IP Courts in China – by He Jing (Anjie Law)

October 9, 2014

HeJing

He Jing has long been an advisor on CERC IP issues and is a contributor to the forthcoming CERC IP and Technology Transfer Guide). He can be contacted at hejing [at] anjielaw [dot] com.
After an expedited legislative process over the last 9 months, China’s legislature passed a bill on August 31 announcing that three specialized IP courts will open up in Beijing, Shanghai and Guangzhou.  Supreme People’s Court is in charge of the actual operational details and has vowed to have these courts up and running by the end of 2014.  All the three specialized IP courts will be intermediate-level courts, meaning that they will handle many cases as the court of first instance and the decisions may be appealed to provincial-level higher people’s courts.
It is no secret that the establishment of the specialized courts is to better deal with “technology centric” matters such as patent and trade secret cases.  The new courts will act as the court of first instance to handle civil infringement cases involving patents, new plant variety, layout designs of integrated circuit and trade secret cases.  Also, the Beijing Specialized IP Court will be responsible to act as the court of first instance to review all the patent validity and patent prosecution decision coming out of Patent Review Board (PRB).  The rational is that a specialized court will deliver more “consistent” decisions through a group of specialized judges especially on those patent case or IP cases involving complicated technological matters.
The idea of specialized IP courts went back as far as mid-1990s.  Chinese IP judges and professors already proposed the idea of establishing specialized patent courts.  The very idea was brought to life and was heavily researched in 2006-2008 at the time China was planning the third amendment of the patent law.  Many people advocated the idea of establishing a higher court level IP court, similar to the US Court of Appeals for the Federal Circuit, Japan IP High Court, and Taiwan IP High Court.  But the government dropped the plan.  One reason is that the new establishment of the IP courts would require substantial changes of the various court organization legislations.  It would have consumed significant amount of political capital to make the change.
While almost nobody believed the specialized court would become possible in China in any near future, China announced its new reform roadmap in the Third Plenum Resolution in October 2013, which stated that China will “explore” the establishment of specialized IP as a way to improve IP protection.  This completely changed the momentum, directly resulting in a quick launch of the specialized IP courts.
What is notably interesting is the debate among leading scholars, IP judges and IP practitioners around what should be the form of the specialized IP court.  People generally believe the specialized courts are indicative of pro-IP policy directions.  At the same time, many observers strongly advocated that new specialized IP courts should be an appellate court at provincial level.   Under the current model, an IP court at intermediate court level has no power to render final judgments in high stake cases, including those related to TRAB cases.  The fact that the IP court decisions will be appealed to provincial higher courts somewhat compromises the very purposes of specialized courts, as people may argue.
Despite the debate, the new specialized IP courts should be a fairly positive development for IP owners, or at least provide better opportunities for IP litigations.  The establishment itself continues to prove China has strong interest to improve quality of adjudicating IP matters.  The new courts may have some incentives to delivery positive results.  One particular area is damages.   China Premier Li Ke Qiang just announced at Davos Forum that China is going to impose “massive sum” of damages against IP infringers.  The specialized IP courts should be the place for reflecting the new trend.
At a deeper level, the new courts may be indicative of the upcoming judiciary reforms plan in China.  China has commenced pilot programs for judiciary reforms in Shanghai and other cities.  One key measure is to increase staff support for judges and improve the budgeting and other benefits for the courts.  Another measure is to increase the “independence” of the judges that are assigned to specific cases, which means minimizing any interference from third parties.  The specialized courts may be the place for implementing such pilot programs at full scales.
The same legislative bill requires Supreme People’s Court to report back in three years about the outcome of the specialized IP courts.   We expect that some judges with very strong IP background will play key roles in the new courts.  The feedback from the IP world may be helpful for China to decide whether and how the specialized IP courts should evolve to next level.

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